COVID-19's Impact on Small Businesses
In light of the situation prevailing across the country, small and medium enterprises are facing unprecedented challenges. Unparalleled, the consequences of which will be tangible for years to come. These companies are considered at our present time more. Companies are affected by social distancing measures, and many of them are facing shutdowns as a result.
Of the ongoing crisis. Although some measures have been taken to support small and medium enterprises to combat the short-term consequences of this closure, there is still a need for a more effective response to mitigate the effects of this crisis on the economic lifeline. Bookkeeping is of great importance in overcoming This crisis and protecting small companies from the financial repercussions.
The highest priority should be given to maintaining the health and safety of people as much as possible. And companies can assist by focusing on the bookkeeping function, which can save companies a lot of losses incurred due to this crisis, which did not affect social distancing, which is a priority as you can request bookkeeping services online. By doing so, small businesses could save on spending on PPE, conducting examinations, diagnostic tests, and adding more hospital beds.
Deep concern about business and corporate continuity
Half of the small and medium-sized companies are not sure of their ability to withstand in the face of the current crisis. It is especially among the most vulnerable and vulnerable enterprises, small companies, which seems to be more evident and companies operating in the hospitality sector.
In addition, the companies share bleak expectations about the duration of the crisis. One company expects that one of the two companies will return to normal before August. It expects that its business will need a more extended period to restore its capabilities.
The current crisis is forcing many to rethink their business models
In light of the current situation, most companies expect to make changes in their operations, even in one way. Most companies intend to adopt measures to reduce costs in the long run and focus more on better cash management, which will provide them with flexibility when facing future adversities.
There is also a clear shift towards digitalization. Many companies intend to improve their digital presence and increase the automation of their operations, changing their accounting plans and bookkeeping in small companies according to widely differing beliefs about the possible duration of the crisis. So the bookkeeper should not make plans for One-size-fits-all accounting and finance. We differ widely on the likely time of the crisis, so don't come to the table with one-size-fits-all accounting and financing plans.
The bookkeeper aims to maintain liquidity.
In an attempt to alleviate the negative impact of the crisis on companies, the majority began to postpone whatever possible payments due, and a large percentage resorted to external financing, and many companies intend to follow suit. It is worth noting that companies are currently seeking to postpone measures that directly affect their employees and interact with the search for other solutions, as salary deductions and layoffs occupied a last resort for most companies. And here comes the bookkeeping function with an explanation as it works to reduce expenditures in a way that prevents significant damage from the economic repercussions of the Corona crisis.
Preparing financial reports for confirmation promptly.
When separate line items are created in the budget to respond to efforts to combat Coronavirus, they must follow the standard financial reporting system (IPSAS or National Standards). Governments can benefit from more frequent interim reporting on specific items for the decision-making process.
Payment process management should be improved.
The emergency is likely to lead to a lack of liquidity. Hence, it is imperative that more bookkeeping focuses on optimal cash variable amounts and credit facilities. In addition, a bookkeeper can review the normal payment processes of invoices, goods/service receipts, and payments in both the implementing ministry and the ministry of finance to explore how best to use the time frame provided by creditors in making payments.
In other cases, contractors or sellers of goods and services may require additional or more outstanding advance payments for which limits must be set. At the forefront of these efforts, a bookkeeper can create a system that allows mobile financial transaction systems to ensure small amounts are recovered quickly. Payments made outside the IFMIS must be recorded later in that system with the least possible time lag.
The need for an effective procurement system that is accountable.
The response to the Coronavirus can ensure the increased use of single-source purchases with known and trusted suppliers to accelerate that process. It would be prudent for the bookkeeping team to issue additional guidance on managing this process in such cases. It may be helpful to monitor the international and local market conditions to make comparisons between prices and take the required measures promptly. To mitigate the risk of fraud, officials need to maintain records of the audit process and acceptance of goods/services.
In some cases, it may be necessary to waive standard requirements such as bid security and bid bond guarantees, although this must be documented with appropriate justification. Whenever possible, pre-existing frameworks can be used. The bookkeeping team will handle these processes by developing a robust crisis management plan.
What measures can bookkeeping provide to ensure the continuation of its operations in light of the current crisis?
The current crisis is a real test for the management in general, the accounts departments, and the internal audit departments. The departments must focus mainly on the outputs of the accounting system to prepare budgets and prepare the financial position lists and profits and losses periodically so that the decision-maker can take the right decision at the right time. The administration must adopt and implement five crucial strategies during this period. These strategies can be considered as a miniature Marshall Plan:
- The strategy of rationalization and maximization (means the strategy of rationalizing expenditures and maximizing revenues)
- Borrowing strategy to support the operations and cash flow of the business when needed
- Marketing and promotional operations support strategy
- A strategy for reviewing the historical performance of all operations of commercial activity to prepare for post-crisis economic openness
- Strategy to evaluate and support the digital transformation of all business processes.
What are the effects of measures to limit the spread of the Coronavirus on the bookkeeping profession?
The main weakness of our profession is represented by a considerable percentage in one stage, which is the stage of documentary examination or vouching procedures. It requires the work teams at the audit, accounting, bookkeeping, and tax offices to make field visits to the client and in light of the current work environment that involves applying divergence strategies. Physical and remote work encouragement, the work of auditing, accounting and tax offices will not stop, and it must continue to support the economic sectors professionally and technically, especially at such a time when businesses need every possible support.
What is the role of bookkeeping in limiting the impacts of the Coronavirus crisis?
This role is considered a pivotal and essential role for business. Businesses greatly need advice and technical support at such times, and at such times, many risks arise that management must pay attention to. The risks of bankruptcy and sudden closure may loom on the horizon. Risks Fraud is also not far away. Here comes the auditor's role, who must play a significant role in checking and reviewing to enhance confidence in the outputs of the accounts departments and so that the decision-making process is based on solid ground.
This growing global epidemic has shown that companies often neglect crisis management. In these trying times, the accounting firms' resilience is being tested - at least on issues such as tax transparency, gender equality and the future of auditing.
It is a simple reminder to companies that they need to continue planning to face all risks and crises, not the least of the seriousness of the Coronavirus or the black swan epidemic, as some call it. In the long term, the accounting sector should seize the opportunity to learn from this experience as leadership teams often fail to routinely benefit from crisis lessons and take appropriate steps to strengthen risk management to prevent mishandling of similar crises in the future.
The emergence of this virus demonstrates the importance of ensuring that the company's entire infrastructure is prepared to respond to crises in the organization. The bookkeeping team should focus on core activities and the needs of primary stakeholders when considering the long term. The impact of social distancing resulting from Covid-19, which may have a negative effect on bookkeepers, must be taken into account.